Value-Based Contracting: Do We Have The Data?

Refusing to get on board with value-based contracting (VBC) seems analogous to pushing petrol and diesel engines in the age of electric cars — it just feels retrograde. Any bid to contain costs and improve transparency is a no-brainer. But are companies generating the data to deliver on these deals?

Harry Vargo, Director of Value-Based Contracting at managed healthcare company Aetna, believes so. “We have been doing value-based contracting for three to four years now and our capabilities are improving all the time,” says Vargo. “We are learning as we go and we are getting better at all levels. We have got more sophisticated about the data, understood more about the data we can get and the data we can’t get.”

Aetna is learning fast, using data in new and better ways all the time and improving on the sophistication of the contracts that result. “The contracts we did three years ago I would not do today because they were not robust enough,” says Vargo.

“When we first started we had one or two metrics, for example poly pharmacy claims and are we seeing constant use, or do we see a patient taking a drug for three months and then stopping? Now I am looking at multi-layered metrics looking for [a variety of things], such as how can we associate specific lab values with specific patients.”

Being a fully integrated health plan means patient data from dental, medical and pharmacy claims is available to Aetna giving it the breadth and depth of data needed to pull meaningful insights from them, he says. “We are very fortunate in that integrated data. We are always looking for more measurable specific and targeted outcomes.”

The skill is in knowing how to interrogate all these data sources to best effect, says Vargo. “There are a lot of moving parts there, it is a question of how you navigate internally those moving parts.”

There is much cause for optimism. Greater integration of different data sets is happening all the time and new sources of exploitable data are on the horizon, notably consumer wearables that track patient metrics such as steps taken, heart rate and movement. These are expected to add to the possibilities for contracts based on even more specific and measurable outcomes.

“A lot of where we go depends on where the technology takes us. Wearables, AI assistants like Alexa or Google home are things to be integrated. They can help patients remember to take medication or they can measure someone’s movement.

“For example, if you are covering a diabetic drug and you are not seeing the expected outcome and their Apple Watch data show that they are only taking 500 steps a day, it’s clear they are spending too much time on the couch. That next generation type stuff is the future of outcomes-based contracting, integrating metrics from new tech into our existing metrics.”

For Aetna, the main challenge is not so much about getting the data, it is working out how to expand its internal capabilities to handle more VBCs. With between 50 and 60 contracts already underway and the potential to rapidly increase that to beyond the 100 mark, the question is how best to do it, says Vargo.

“We are often our own bump in the road. These contracts are not easy to do, not easy to come to agreement on and not easy to adjudicate. There is a lot of legwork and review and analysis to be done.

“Up to now we have kept a smaller VBC group and that allowed us to be nimbler and to move these from concept to something actionable a lot easier, but we are now at the point where we are needing to expand.

“We are deciding how do we grow now. Investing in platforms to better aggregate and co-ordinate the data is one area under consideration, how we include advancements in technology when it comes to platforms and innovation like blockchains. They will be valuable to the future of VBC. Do we focus on those or do I try to get higher headcount to expand?

“We have all these big data warehouses, but it can take forever to run a report. We need a way to significantly speed that up and to have more real time information not just for us but for our partners on the pharma side. We are focusing on those next steps now.”

Since you're here...... and value our content, you should sign-up to our newsletter. Sign up here

When cancer patient Pete started to look into who held records about his illness and treatment,...

Latest Reports

Our entire range of industry leading reports are listed below. Each is either available in full to our premium subscribers or available for purchase. Standard subscribers can view extracts of each report for free. Click the links for more details.